AK Steel (AKS) Raises Prices for Carbon Steel Products

19 November 2016

AK Steel AKS said that it is raising current spot market base prices for all carbon flat-rolled steel products. The steel maker is increasing the prices of these products by a minimum of $40 per ton. The hike is effective immediately with new orders.

AK Steel's shares closed roughly 2.5% lower at $8.07 on Nov 15.    

AK Steel's earnings for third-quarter 2016 beat the Zacks Consensus Estimate. Sales fell by double digits year over year, but beat expectations. Shipments for the quarter decreased 24% year over year to 1,425,900 tons.

AK Steel is well placed to gain from strength in the automotive market and higher shipment of steel products to automakers, supported by increased automotive builds. Healthy demand for the company's carbon and stainless steel products from its automotive customers is expected to continue in the balance of 2016.

The company is laying importance on de-emphasizing commodity products and launching new products, such as its recently announced Nexmet line of next-generation advanced high strength steels.

The Nexmet family of products will provide high strength, greater ductility, and enhanced formability solutions for a variety of needs for structural and exterior automotive body lightweighting uses. These products are geared to help automotive original equipment manufacturers (OEMs) in meeting 2025 U.S. Corporate Average Fuel Economy (CAFE) targets.

AK Steel also remains committed to provide competitive pricing in the current operating environment. Price increases in the spot market for various steel products have been observed of late. The company should also gain from its cost-reduction actions.

However, the steel industry is still not out of the woods. The industry continues to reel under overcapacity. The U.S. steel industry also remains under the risk of cheaper imports despite some favorable developments on the import front in the recent past (in the form of imposition of heavy tariffs on imports).